What is the condition for Fitstop to consent to a transfer of the franchise?
Fitstop Franchise · 2024 FDDAnswer from 2024 FDD Document
- 15.8 Subject to our Right of First Refusal, you may transfer or assign any rights under this Agreement upon our written consent.
We may condition transfer on such factors as:
- ©2024 Fitstop USA, Inc. 15.8.1 our satisfaction that the proposed transferee meets (and that transferee's officers or partners, if any, meet) the character, business experience, credit rating, financial strength, and other
standards, criteria, and qualifications then being sought by us from new and other transferee franchisees with due regard to the business potential of the unit; we may withhold consent if we believe in our sole discretion that the number or quality of units to be transferred or the sales price proposed or the terms of payment to you by the prospective transferee are such that successful operation of the Franchise by the transferee might be unreasonably doubtful;
15.8.2 full payment of all your outstanding debts;
15.8.3 execution of a general release of all claims against us and our agents by you (or the transferor, if different) upon the transfer of your (or the transferor's) entire interest in this Agreement, or a material portion thereof;
15.8.4 execution by you of a written acknowledgment that your confidentiality and noncompetition covenants, and their application to all covered persons, shall survive any assignment and remain effective as though the assignment had not occurred;
15.8.5 the transferee's covenant to us to enforce, and not to waive, the aforesaid covenant not to compete given to them by the transferor;
15.8.6 the transferee's execution of the then-current form of this Agreement (if the thencurrent Franchise Agreement is required to be signed by the transferee, no new initial franchise fee will be required and the term of the franchise will be as established under a new Franchise Agreement);
15.8.7 payment by you of the Application Fee;
15.8.8 payment by you of the applicbale Transfer Fee, as defined and described more fully in this Section;
15.8.9 paid attendance and completion by the transferee to our satisfaction of our training courses;
15.8.10 execution by you and the transferee of such transfer documents as we may require, including personal guarantees; and
15.8.11 your good standing for compliance with this Agreement and the Manual(s) prior to and pending the proposed transfer, including cure of all curable defaults and noncompliance.
Source: Item 23 — RECEIPTS (FDD pages 50–135)
What This Means (2024 FDD)
According to Fitstop's 2024 Franchise Disclosure Document, Fitstop may allow a transfer of franchise rights if certain conditions are met. Fitstop can transfer the agreement, but the franchisee cannot without Fitstop's written consent. To begin the transfer process, the franchisee must provide Fitstop with written notice of the proposed transfer terms, including the interest to be transferred, purchase price, financing terms, and the proposed transfer date. The franchisee must also include copies of all related contracts and agreements. A non-refundable Application Fee of $500 is required with the transfer notice. This fee will be credited towards the Transfer Fee if the transferee is approved.
Fitstop has a Right of First Refusal, allowing them to take over the interest on the same terms as the proposed transferee or assign it to a third party who guarantees payments to the selling entity. Fitstop has 30 calendar days to exercise this right after receiving all necessary data and documents. If Fitstop waives its Right of First Refusal, the transfer must be completed within 90 calendar days, or a new Right of First Refusal commences.
Additional conditions for Fitstop's approval include the franchisee being in full compliance with the Franchise Agreement and paying all outstanding amounts. The transferee and their general managers must complete Fitstop's training program, execute the then-current Franchise Agreement, and pay the transfer fee. Fitstop must also approve any written agreements related to the transfer, and the franchisee must supply any additional required information. The franchisee must also provide a personal covenant to the transferee, agreeing not to divert business from Fitstop and its franchisees, and sign a general release and other required documents. Fitstop will assess whether the transferee meets the standards for new franchisees, considering their character, business experience, credit rating, and financial strength. Fitstop may withhold consent if the number or quality of units to be transferred, the sales price, or payment terms make the transferee's success doubtful. The franchisee must also ensure the transferee agrees to enforce the non-compete covenant given to them by the transferor.